Undue influence

An equitable doctrine protecting against the improper use of a position of ascendancy or power over another to procure a contract or gift inter vivos.

In certain relationships, such as those of parent and child, guardian and ward, solicitor and client, and doctor and patient, the power to influence is presumed. In other cases, a relationship of influence may be proven on the facts. Where there is a relationship of influence, and undue influence is not disproved by the influential party, the transaction will be set aside as invalid.

Furthermore, where there is no relationship of influence, it is still open to the plaintiff to allege (and prove) that the defendant actually influenced him/or her. In probate proceedings, there are no presumptive relationships, and undue influence must always be proved by the party who alleges it.

The leading Australian case of Johnson v Buttress [1936] HCA 41 interpreted the difference between actual undue influence and presumed undue influence:

• Actual: where it is proven that the defendant exerted influence over the complainant to induce entry into the contract
• Presumed:
  • deemed relationship of influence – relationships that raise the premise at law that influence has been used
  • relationship of influence in fact – where the complainant conceals that trust and confidence was bestowed in the wrongdoer and therefore existence of influence should be presumed